US economy could contract in H1CY08: Fed

The US economy could contract in the first half of this year but should then pick up as aggressive interest rate cuts stimulate growth, and financial and housing market woes recede, Federal Reserve Chairman Ben Bernanke said today, according to a report on the website of Reuters.

"It now appears likely that real gross domestic product (GDP) will not grow much, if at all, over the first half of 2008 and could even contract slightly," he said in remarks prepared for delivery to the congressional Joint Economic Committee.

"We expect economic activity to strengthen in the second half of the year in part as the result of stimulative monetary and fiscal policies, and growth is expected to proceed at or a little above its sustainable pace in 2009," he added.